Starbucks Corp (NASDAQ:SBUX) Earnings Model
Author: Christopher Adrian, Published: October 10, 2021 8:15am Category: Earnings Preview (Prior to the F4Q2021 SBUX Results)
Q4FY2021 Earnings Preview: SBUX is scheduled to report Q4FY2021 earnings on 10/28. I do expect Q4FY2021 EPS to be $1.00 (consensus $1.01), leading to FY2021 EPS of $3.24 (consensus $3.24). Q4FY2021 revenue is expected to be $8.28bn., leading to FY2021 revenue of $29.19bn.
Base Scenario: The main drivers of this model to forecast top-line growth are new stores added and the yoy. comp. stores sales growth rate. Bottom-line growth is also driven by the targeted operating margin (non-GAAP). According to my base scenario I do expect the yoy. comp. store sales growth rate to be 4.5% from FY2023 onwards, being in line with the targeted long term yoy. comp. store sales growth rate (4.0% to 5.0%). I do expect that this management guidance already accounts for some of the major trends in the global coffee market:
The main effects are expected to take place in FY2023 due to hedging strategies conducted by management. With regard to favorable global trends and the pricing power of SBUX, I do expect that the pressure on margins will be partially offset by pricing initiatives in FY2022 and FY2023, leading to operating margins (Non-GAAP) to be at 18.5% in FY2023.
Valuation: The implied 12m target share price is derived from the equal weighted average of my DCF model (base scenario) and from 12m F P/E-multiple with 31.4x base scenario FY2022E EPS of $3.79. The 12m F P/E-multiple represents a premium to a group of comparable fast food restaurants (Median 26.2x) which I think is reasonable due to the potential of higher medium and long term revenue growth of SBUX. More details are given in the equity research report attached.
Base Scenario: The main drivers of this model to forecast top-line growth are new stores added and the yoy. comp. stores sales growth rate. Bottom-line growth is also driven by the targeted operating margin (non-GAAP). According to my base scenario I do expect the yoy. comp. store sales growth rate to be 4.5% from FY2023 onwards, being in line with the targeted long term yoy. comp. store sales growth rate (4.0% to 5.0%). I do expect that this management guidance already accounts for some of the major trends in the global coffee market:
- yoy. growth of the global coffee market of 8.0% to 9.0% until 2024,
- consumer shifts to higher quality products (e.g. "premium arabica coffee") and
- coffee as a part of a change in consumer's lifestyle with trends to "better for You" and "cold brew" options.
The main effects are expected to take place in FY2023 due to hedging strategies conducted by management. With regard to favorable global trends and the pricing power of SBUX, I do expect that the pressure on margins will be partially offset by pricing initiatives in FY2022 and FY2023, leading to operating margins (Non-GAAP) to be at 18.5% in FY2023.
Valuation: The implied 12m target share price is derived from the equal weighted average of my DCF model (base scenario) and from 12m F P/E-multiple with 31.4x base scenario FY2022E EPS of $3.79. The 12m F P/E-multiple represents a premium to a group of comparable fast food restaurants (Median 26.2x) which I think is reasonable due to the potential of higher medium and long term revenue growth of SBUX. More details are given in the equity research report attached.
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